Michael Hill Jeweller (Australia) Pty Ltd T/A Michael Hill

[2023] FWC 1193

[2023] FWC 1193

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.318 - Application for an order relating to instruments covering new employer and transferring employees

Michael Hill Jeweller (Australia) Pty Ltd T/A Michael Hill

(AG2023/1162)

Retail industry
COMMISSIONER HUNT	BRISBANE, 26 MAY 2023

Application for an order relating to instruments covering new employer and transferring employees

1. On 21 April 2023, Michael Hill Jeweller (Australia) Pty Ltd T/A Michael Hill (the Applicant) made an application to the Fair Work Commission (the Commission) for an order pursuant to s.318(1)(a) of the Fair Work Act 2009 (the Act) that the following three enterprise agreements will not cover the Applicant and transferring employees from the impending old employer, Bevilles Pty Ltd:

• Bevilles Store Manager and Assistant Store Manager Enterprise Agreement 2013

• Bevilles Jewellers Trainee Managers Collective Agreement 2008

• Bevilles Jewellers Flexible Part Time Sales Assistants Collective Agreement 2008

1. On 18 May 2023, the application in respect of the Bevilles Jewellers Flexible Part Time Sales Assistants Collective Agreement 2008 was withdrawn on account of there being no employees continuing to be covered by that agreement.

1. The Applicant is covered by the Michael Hill Enterprise Agreement 2022 (MH EA).

1. The Applicant is likely to be the new employer of employees currently employed by Bevilles Pty Ltd, with a likely commencement date of employees of 31 May 2023. 

Transfer of business

1. Section 311 of the Act sets out when a transfer of business occurs:

“311      When does a transfer of business occur

Meanings of transfer of business, old employer, new employer and transferring work

(1)       There is a transfer of business from an employer (the old employer) to another employer (the new employer) if the following requirements are satisfied:

(a)       the employment of an employee of the old employer has terminated;

(b)       within 3 months after the termination, the employee becomes employed by the new employer;

(c)       the work (the transferring work) the employee performs for the new employer is the same, or substantially the same, as the work the employee performed for the old employer;

(d)       there is a connection between the old employer and the new employer as described in any of subsections (3) to (6).

Meaning of transferring employee

(2)       An employee in relation to whom the requirements in paragraphs (1)(a), (b) and (c) are satisfied is a transferring employee in relation to the transfer of business.

Transfer of assets from old employer to new employer

(3)       There is a connection between the old employer and the new employer if, in accordance with an arrangement between:

(a)       the old employer or an associated entity of the old employer; and

(b)       the new employer or an associated entity of the new employer;

the new employer, or the associated entity of the new employer, owns or has the beneficial use of some or all of the assets (whether tangible or intangible):

(c)       that the old employer, or the associated entity of the old employer, owned or had the beneficial use of; and

(d)       that relate to, or are used in connection with, the transferring work.

Old employer outsources work to new employer

(4)       There is a connection between the old employer and the new employer if the transferring work is performed by one or more transferring employees, as employees of the new employer, because the old employer, or an associated entity of the old employer, has outsourced the transferring work to the new employer or an associated entity of the new employer.

New employer ceases to outsource work to old employer

(5)       There is a connection between the old employer and the new employer if:

(a)       the transferring work had been performed by one or more transferring employees, as employees of the old employer, because the new employer, or an associated entity of the new employer, had outsourced the transferring work to the old employer or an associated entity of the old employer; and

(b)       the transferring work is performed by those transferring employees, as employees of the new employer, because the new employer, or the associated entity of the new employer, has ceased to outsource the work to the old employer or the associated entity of the old employer.

New employer is associated entity of old employer

(6)       There is a connection between the old employer and the new employer if the new employer is an associated entity of the old employer when the transferring employee becomes employed by the new employer.”

Transferable instrument

1. Section 312 of the Act details instruments that may transfer:

“312      Instruments that may transfer

Meaning of transferable instrument

(1)       Each of the following is a transferable instrument:

(a)       an enterprise agreement that has been approved by the FWC;

(b)       a workplace determination;

(c)       a named employer award.

Meaning of named employer award

(2)       Each of the following is a named employer award:

(a)       a modern award (including a modern enterprise award) that is expressed to cover one or more named employers;

(b)       a modern enterprise award that is expressed to cover one or more specified classes of employers (other than a modern enterprise award that is expressed to relate to one or more enterprises as described in paragraph 168A(2)(b)).

Note:  Paragraph 168A(2)(b) deals with employers that carry on similar business activities under the same franchise.”

1. The Bevilles Store Manager and Assistant Store Manager Enterprise Agreement 2013 and the Bevilles Jewellers Trainee Managers Collective Agreement 2008 are enterprise agreements and are therefore each a transferable instrument within the meaning of s.312(1)(a) of the Act.

Relevant legislation

1. The application seeks for the Commission to make an order under s.318 of the Act, which is set out below:

“318      Orders relating to instruments covering new employer and transferring employees

Orders that the FWC may make

(1)       The FWC may make the following orders:

(a)       an order that a transferable instrument that would, or would be likely to, cover the new employer and a transferring employee because of paragraph 313(1)(a) does not, or will not, cover the new employer and the transferring employee;

(b)       an order that an enterprise agreement or a named employer award that covers the new employer covers, or will cover, the transferring employee.

Who may apply for an order

(2)       The FWC may make the order only on application by any of the following:

(a)       the new employer or a person who is likely to be the new employer;

(b)       a transferring employee, or an employee who is likely to be a transferring employee;

(c)       if the application relates to an enterprise agreement—an employee organisation that is, or is likely to be, covered by the agreement;

(d)       if the application relates to a named employer award—an employee organisation that is entitled to represent the industrial interests of an employee referred to in paragraph (b).

Matters that the FWC must take into account

(3)       In deciding whether to make the order, the FWC must take into account the following:

(a)       the views of:

(i)          the new employer or a person who is likely to be the new employer; and

(ii)         the employees who would be affected by the order;

(b)       whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment;

(c)       if the order relates to an enterprise agreement—the nominal expiry date of the agreement;

(d)       whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace;

(e)       whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer;

(f)       the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer;

(g)       the public interest.

Restriction on when order may come into operation

(4)       The order must not come into operation in relation to a particular transferring employee before the later of the following:

(a)       the time when the transferring employee becomes employed by the new employer;

(b)       the day on which the order is made.”

Witness statement

1. Ms Juanita Price, Remuneration, Compliance and Governance Manager of the Applicant made a witness statement in support of the application. 

1. The Applicant is a wholly owned subsidiary of Michael Hill International Limited (MH IL). MH IL is listed on both the Australian and New Zealand stock exchanges. The Applicant is the legal entity that employs all of the employees who work in the MH ILgroup.

1. Fine Jewellery Retail AU Pty Ltd (Fine Jewellery) is also a wholly owned subsidiary of MH IL. Fine Jewellery is the company that operates the MH IL group’s retail operations in Australia. Fine Jewellery is an associated entity of Michael Hill within the meaning given by section 50AAA of the Corporations Act 2001.

1. The MH IL group operates 148 stores in Australia.  The Applicant employs approximately 1,600 people within Australia, with 1,408 of those employees covered by the MH EA. The MH EA covers employees that would otherwise be covered by the General Retail Industry Award 2020 (GRIA), Clerks – Private Sector Award 2020 (Clerical Award), Manufacturing and Associated Industries and Occupations Award 2020 (Manufacturing Award), Storage Services and Wholesale Award 2020 (Distribution Award) and the Graphic Arts, Printing and Publishing Award 2020 (Design Award).  Its nominal expiry date is 4 December 2026.

1. MH IL announced on 19 April 2023 its intention to acquire the assets of Bevilles Corp

Pty Ltd.  The purchaser is Fine Jewellery and the purchase is planned for completion on 31 May 2023.  The employees will, from the completion of the sale, be employed by the Applicant.

1. As a condition of the purchase, the Applicant is required to make offers of employment to all employees of Bevilles Pty Ltd (Bevilles) on the following conditions:

(a)       Be for employment in the same position or a substantially similar position to the
  employee's position with Bevilles immediately before the purchase;

(b)       Be on terms and conditions substantially similar to, and considered on an overall

basis no less favourable to the employee than, those under which the employee was employed by Bevilles immediately before the purchase;

(c)       All leave accruals (annual leave, personal/carer’s leave, parental leave and long

service leave) will be recognised by the Applicant. If the Transferring Employees have leave approved, they will be able to take this time. Transferring Employees’ prior service will be recognised on transfer; and

(d) Provide that service with Bevilles will be treated as continuous with any period of service with the Applicant, including for the purposes of the employee’s leave

entitlements, calculating any redundancy payment that may be payable and
  accessing unfair dismissal rights under the Act.

1. The work each of the Bevilles employees performs for the Applicant is intended to be the same, or substantially the same, as the work each of the employees performed for Bevilles.

Whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

1. Ms Price has reviewed the terms and conditions of the two enterprise agreements against the MH EA.  In respect of the Bevilles Store Manager and Assistant Store Manager Enterprise Agreement 2013 (Store Manager Agreement), she considers the following entitlements to be greater in the MH EA:

(a) Higher minimum rates of pay with indexation linked to the Commission’s Annual Wage Review;

(b) Higher entitlements to Paid Parental Leave, being 4 weeks paid leave for the primary carer and 2 weeks paid leave for the secondary carer compared to 2 weeks paid with an additional 8 hours of leave for prenatal medical appointments;

(c) Substantially more allowances are provided for and higher rates for the allowances;

(d)       Fewer hours covered by the spread of ordinary hours;

(e) Rostering limitations that facilitate a better work life balance, including the minimum shift engagement, ordinary hours on no more than 6 consecutive days, ordinary hours on no more than 10 days per pay fortnight, and the number of consecutive days off;

(f) Ability to purchase up to 2 weeks of additional annual leave per financial year; and

(g)       Paid community service leave and paid family and domestic violence leave.

1. Ms Price considers the following terms and conditions are more beneficial to employees in the Store Manager Agreement than the MH EA:

(a)      The MH EA provides that higher duties are applicable for the whole shift only if more than 2 hours of the higher duties are performed, compared to the Store Manager Agreement where the whole shift is eligible;

(b) Sunday penalty rates in the Store Manager Agreement are consistent with the Retail Award as it was in 2010 at 200%, whereas the MH EA is consistent with the Retail Award at it was in 2020 at 150%;

(c) Public holiday worked penalty rates in the Store Manager Agreement are consistent with the Retail Award as it was in 2010 at 250% (or an equivalent day or time off), whereas the MH EA is consistent with the Retail Award as it was in 2020 at 225% penalty rate;

(d) An additional day off is provided under the Store Manager Agreement where a public holiday falls on a non-rostered day; and

(e) Accident make-up pay is provided for if an employee sustains an injury in respect of which they are entitled to receive weekly compensation payments under relevant State or Territory legislation.

1. In respect of the Bevilles Jewellers Trainee Managers Collective Agreement 2008 (Trainee Managers Agreement), Ms Price considers the following entitlements to be greater in the MH EA:

(a)Higher minimum rates of pay with indexation linked to the Commission’s Annual Wage Review;

(b)Higher entitlements to Paid Parental Leave, being 4 weeks paid leave for the primary carer and 2 weeks paid leave for the secondary carer compared to 2 weeks paid with an additional 8 hours of leave for prenatal medical appointments;

(c) Substantially more allowances are provided for and higher rates for the allowances;

(d)       Specifying a spread of ordinary hours of work rather than example 2 week roster
  patterns;

(e) Rostering limitations that facilitate a better work life balance, including minimum shift engagement, ordinary hours on no more than 6 consecutive days, ordinary hours on no more than 10 days per pay fortnight and consecutive days off;

(f)       Ability to Purchase up to 2 weeks of additional annual leave per financial year;

(g)       Paid community service leave and paid family and domestic violence leave; and

(h) Provides overtime rates which is more beneficial than offering authorised time in lieu.

1. Ms Price considers the following terms and conditions are more beneficial to employees in the Trainee Managers Agreement than the MH EA:

(a) An additional day off is provided under the Trainee Managers Agreement where a public holiday falls on a non-rostered day;

(b) The Trainee Managers Agreement provides that 16 weeks of redundancy pay is payable for employees with at least 10 years of continuous service. The MH EA applies the current National Employment Standards (NES) provision of 12 weeks for employees with at least 10 years of continuous service; and

(c) Accident make-up pay is provided for if an employee sustains an injury in respect of which they are entitled to receive weekly compensation payments under relevant State or Territory legislation.

1. The Applicant intends to preserve the following entitlements to transferring employees:

(a)   Store Manager Agreement:

(i)Accident Pay provisions; and

(ii)Increasing the base salary of each individual by $3,000 in respect of changes made to their public holiday pay.

(b)   Trainee Managers Agreement:

(i)Accident Pay provisions;

(ii)Where the employee has 10 or more years of service, the employee’s redundancy entitlement will be 16 weeks’ pay; and

(iii)Increasing the base salary of each individual by $3,000 in respect of changes made to their holiday pay.

1. Ms Price noted that there are no unions covered by either of the two Bevilles enterprise agreements. 

The views of the Applicant

1. In respect of the Applicant’s views in relation to the transfer of the two Bevilles enterprise agreements, the Applicant has a single payroll system for all of its employees covered by the MH EA.  It has an integrated rostering and time and attendance module that has been configured to the requirements of the MH EA.  Naturally, it supports the application.

Whether the Bevilles enterprise agreements would have a negative impact on the productivity of the Applicant’s workplace; and

Whether the Applicant would incur significant economic disadvantage as a result of the Bevilles enterprise agreements covering the Applicant

1. Ms Price stated that if the order is not made as sought, there would be numerous types of employees employed from 31 May 2023 with different terms and conditions, with management of grievances to be dealt with under differing dispute procedures. Further, the Applicant would have to configure its payroll, rostering and time and attendance system to apply the terms of each of the Bevilles enterprise agreements.  She estimates it may take over three months to set up, at a cost of up to $1 million.

1. Ms Price is concerned that the Applicant being obliged to have differing conditions of employment for employees working alongside each other has the potential to create confusion, disharmony and increase the risk of incorrect wage payments.

1. Ms Price stated that the terms of the Bevilles enterprise agreements were negotiated for a different business with different operational requirements, in a different decade, before the update of the modern awards as part of the award modernisation process.

The views of the employees who would be affected by the order

1. At the time of making her witness statement, Ms Price stated that the Applicant had had very limited opportunity to engage directly with the transferring employees to seek their views in respect of the application. 

The degree of business synergy between the MH EA and the Bevilles enterprise agreements  

1. In its application, the Applicant provided an analysis of the Bevilles enterprise agreements against the MH EA.

The public interest

1. The Applicant submitted that the granting of the order is in the public interest for the following reasons:

(a)It is in the public interest to ensure that the Applicant’s business can operate efficiently without unnecessary complications in its employment relations, to assist in providing the best possible customer experience;

(b)The public interest requires strict compliance with obligations arising under an enterprise agreement. The introduction of two additional industrial instruments will create unnecessary complexity for the Applicant and create risk of non-compliance;

(c)Transferring Employees will be better off overall under the MH EA due to the higher rates and entitlements that are in excess of the Bevilles enterprise agreements;

(d)Having one instrument improves job prospects and versatility by facilitating movement of the team across brands via transfers and/or promotions;

(e)There is less confusion around which rules apply to which team member for both store-based teams and the head office supporting them;

(f)There is less risk of non-compliance to the instruments if there is just one set of rules for everyone to adhere to and be measured against; and

(g)The introduction of the Bevilles enterprise agreements may divert financial and human resources away from the Applicant’s planned expansion of the Bevilles brand. It is in the public interest that this expansion is not hindered, to provide increased job opportunities.

Employee views

1. On 3 May 2023, I issued correspondence to the Applicant which I directed be forwarded to the Human Resources Manager of Bevilles who, it appeared to me, had been graciously assisting the Applicant with its offers of employment to transferring employees. I requested, without directing, the Bevilles Human Resources Manager to assist in circulating correspondence from my Chambers to transferring employees.  This was kindly attended to.  The correspondence informed transferring employees of the application and the considerations the Commission must have, inviting transferring employees to provide any views in respect of the application to my Chambers by 18 May 2023. No views were provided.

Consideration

1. On the evidence before me, I am satisfied that there will be a transfer of business within the meaning of ss.311(1)(a)-(d) of the Act when employees of Bevilles commence employment with the Applicant on 31 May 2023.  

1. I am satisfied that the work of the employees is transferring work within the meaning of s.311(1)(c) in that employees of Bevilles have been offered employment with the same, or substantially the same work the employee performed for the Applicant.   

1. Pursuant to s.311(3) of the Act, and for the purposes of s.311(1)(d) of the Act, there is a connection between Bevilles and the Applicant because the Applicant or its associated entity will take over operational control of Bevilles.  I am satisfied this meets the requirements of s.311(3) of the Act.

1. I am satisfied that employees from Bevilles who take up employment in the same or substantially the same role with the Applicant will be transferring employees for the purpose of s.311(2) of the Act.

1. The application has been made by the Applicant. The Applicant is likely to be the new employer of employees who are likely to be transferring employees. The requirements of s.318(2) have therefore been met.

Section 318(3)(a) – the views of the new employer and the employees who would be affected by the order

1. The likely new employer is Michael Hill, the applicant seeking an order under s.318 that the Bevilles enterprise agreements not cover the new employer and transferring employees. Naturally, it supports making the order sought.

1. As I earlier noted, transferring employees have been provided an opportunity to directly provide their views in respect of the application. 

1. Having regard to the submissions and evidence provided above by the Applicant, this consideration weighs in favour of making the order sought.

Section 318(3)(b) – whether any employees would be disadvantaged by the order in relation to their terms and conditions of employment

1. Having taken into account the detailed evidence of Ms Price, I am satisfied that, overall, transferring employees would not be disadvantaged by the order sought. This consideration weighs in favour of making the order sought. I also note that the Applicant has contractually agreed to grandfather a number of entitlements paid to transferring employees upon commencement with the Applicant.  

Section 318(3)(c) - if the order relates to an enterprise agreement—the nominal expiry date of the agreement

1. The nominal expiry date of the Store Manager Agreement is 26 September 2017.  The nominal expiry date of the Trainee Managers Agreement is 17 June 2014.  The nominal expiry date of the MH EA is 4 December 2026.  If the order is made, transferring employees will be covered by the MH EA and in a position to seek renegotiation of the ME EA approximately 3.5 years after they become employed. 

1. I consider this to be a long period of time and this weighs against the making of the order sought on account of the transferring employees not having a ‘say’ in their conditions of employment in the period until at least the nominal expiry date of the MH EA.

Section 318(3)(d) - whether the transferable instrument would have a negative impact on the productivity of the new employer’s workplace

1. The Applicant has made submissions regarding this matter, which are outlined above. I consider the matters raised by Ms Price regarding the burden of applying multiple industrial instruments to be an avoidable and unnecessary burden on the Applicant. 

1. This consideration weighs in favour of making the order sought.

Section 318(3)(e) - whether the new employer would incur significant economic disadvantage as a result of the transferable instrument covering the new employer

1. The Applicant has referred to the economic impact of increased operational costs if required to continue to apply the Bevilles enterprise agreements, including the potential cost of up to $1 million to integrate payroll to cover the various agreements.  I accept the Applicant’s evidence on this issue.  This consideration weighs in favour of making the order sought.

Section 318(3)(f) - the degree of business synergy between the transferable instrument and any workplace instrument that already covers the new employer.

1. I conclude that the granting of the order will result in a greater degree of synergy for the Applicant and the employees who perform the transferring work, as all employees will be employed pursuant to a single agreement.  This factor weighs in favour of making the order sought.

Section 318(3)(g) - the public interest

1. I am satisfied that making the order would not be contrary to the public interest. I concur with the Applicant’s submissions as to why it is in the public interest to make the order sought. This consideration weighs in favour of making the order sought.

Conclusion

1. Having considered the application and having taken into account each of the matters set out in s.318(3) of the Act, I am satisfied that it is appropriate to make the order sought.

1. In making the order sought under s.318, the Applicant will not become covered by the Bevilles enterprise agreements by virtue of employing employees from Bevilles as transferring employees.   

1. Having regard to s.318(4) of the Act, the order must not come into operation before the later of the time when the transferring employee becomes employed by the new employer or the date on which the order is made.

COMMISSIONER

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